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TMI Blog2006 (4) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of declaration forms. The petitioner also paid the sales tax as charged by respondent No.3. It has been alleged by the petitioner that the tax was paid under a misconception and without examining the legality of charging such sales tax. Subsequently the petitioner took legal advice and came to learn that no sales tax was payable as this kind of transaction was in the nature of works contract and did not constitute sale within the definition of sale under section 2(30) of the Act of 1994. The petitioner raised objection and requested respondent No.3, Texmaco Limited, not to charge any sales tax, but respondent No.3 declined to refrain from charging sales tax unless an order was obtained from the appropriate assessing authority. The petitioner-company thereafter approached the assessing authority and submitted a written representation on May 18, 2005 contending, inter alia, that respondent No.3 was acting illegally in charging sales tax on the invoice price of the vessels and was thereby indulging in unjust enrichment. As no tax was payable according to the petitioner, it did not submit any declaration forms. On October 6, 2005, the petitioner received a fax mail from respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer as part of its statutory duty and/or obligation imposed by a legislative action of the State. We are unable to accept the objection raised by Mr.Mondal that the petitioner cannot be an aggrieved person within the meaning of the West Bengal Taxation Tribunal Act, 1987. Mr.Mondal has raised another technical objection regarding impleading Texmaco Ltd., as a respondent (respondent No.3) in this application. This objection is not sustainable inasmuch as sales tax is being realised by the respondent No.3 and it is its firm stand that it will continue to realise sales tax on the sale price until the competent authorities under the Act of 1994 specifically decides whether such tax is realisable or not. The petitioner has claimed that the transaction is not taxable as it does not involve sale of goods. Nature of the transactions is required to be examined for the purpose of determining the real nature of the transaction. Respondent No.3 is required to be heard for effective adjudication of the basic question involved in this application and it is undoubtedly a proper party, if not necessary party, in the proceeding. The petitioner has contended that the transaction was in the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kirt plate, base plate, skirt access (g) Foundation bolts (h) Gaskets, blank plates, fastners, etc., required for nitrogen filling during despatch (i) All materials required for any gadgets for fabrication and testing (j) Materials for nameplate. Clause 2.3.1 shows that the vessels will be complete in one piece with various components like shell, dished ends, skirt, nozzles, flanges, manhole, manhole cover with davit arm, internal ladder and platform, patched plates for external ladders/platforms, etc. All kinds of fabrication testing including fabrication of dished ends are to be done by the manufacturer. Under clause 5.4 the manufacturer is to submit an indemnity bond for the full value of free issue materials supplied by the petitioner. The manufacturer is also to obtain necessary insurance policy for full value of the plates supplied by the petitioner. Clause 5.9 dealing with terms of payment shows that payment will be made upon submission of invoice by the manufacturer. Warranty clause being clause 5.14 stipulates that all the vessels shall be guaranteed for satisfactory performance against any defect in material supplied by the manufacturer or workm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the parties executing the particular contract. That intention has to be primarily gathered from the terms and conditions which are agreed upon by the parties . . . In the aforementioned case the Supreme Court has laid down that the decisive element in determining whether a particular deal is sale or works contract is the property in the manufactured product. If the final product is regarded as a separate goods belonging to the manufacturer and the property in the said final product remains with the manufacturer/supplier at the time of its delivery, it is a sale. But if the property in the materials used and also in the ultimate product remains with the person placing the order, it is a works contract. In Variety Body Builders [1976] 38 STC 176 (SC) the disputed work was undertaken in the railway premises. Underframes and electric goods were supplied by the Railways. Body of the coach was built on the underframe under regular supervision and vigil of the railways. Railways' labourers were also utilised and engaged. Some parts of the work, namely, handbrake arrangements were actually done by the Railways. On the basis of the terms of the agreement particularl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of the contract involved in such a transaction for the purpose of ascertaining whether it constitutes a contract of sale or a contract of work or service. . . From the decisions earlier cited, it clearly emerges that such determination depends in each case upon its facts and circumstances. Mere passing of property in an article or commodity during the course of the performance of the transaction in question does not render it a transaction of sale. For, even in a contract purely of work or service, it is possible that articles may have to be used by the person executing the work and property in such articles or materials may pass to the other party. That would not necessarily convert the contract into one of sale of those materials. In every case the court would have to find out what was the primary object of the transaction and the intention of the parties while entering into it. In Studio Kamalalaya v.Commercial Tax Officer [1993] 89 STC 307 (WBTT), this Tribunal took the view that in the case of works contract the basic goods forming the subject-matter of works contract should belong to a person other than a contractor. Same view was followed by this Tribunal in Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the materials supplied by the manufacturer and warranty for good performance thereof, clearly indicate that excepting the property in the boiler quality plates supplied free by the petitioner, property in all other materials and the ultimate finished product belonged to respondent No.3, the manufacturer, till delivery thereof to the petitioner upon receipt of agreed consideration in accordance with the terms thereof. It, however, appears that respondent No.3 has charged sales tax on the total amount including the price of the material admittedly supplied free by the petitioner-company and paid such realised tax to the State Government. Prima facie it appears to us that the price/value of the materials supplied free by the petitioner for manufacturing the vessels should not have been included in the sale price. However, we do not express any final opinion on the same inasmuch as several factual aspects particularly whether the petitioner derived any other benefit on the said amount or cash are required to be considered for the same purpose. So we intend to give liberty to the petitioner to raise the said question before the assessing authority of respondent No.3 with supporting m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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